for the half year ended june 30, 2012 (un-audited) hy... · mushtaq ali hirani karachi august 13,...

For the Half Year EndedJune 30, 2012 (Un-audited)

02 Company Information

03 Directors’ Review

05 Auditors' Report

06 Condensed Interim Balance Sheet

07 Condensed Interim Profit & Loss Account

08 Condensed Interim Statement of Comprehensive Income

09 Condensed Interim Cash Flow Statement

10 Condensed Interim Statement of Changes in Equity

11 Notes to the Condensed Interim Financial Information

17 Condensed Interim Consolidated Balance Sheet

18 Condensed Interim Consolidated Profit and Loss Account

19 Condensed Interim Consolidated Statement of Comprehensive Income

20 Condensed Interim Consolidated Cash Flow Statement

21 Condensed Interim Consolidated Statement of Changes in Equity

22 Notes to the Condensed Interim Consolidated Financial Information

Contents

Company Information

2

Board of DirectorsShahid Hamid Pracha (Chairman)Inam ur Rahman (Chief Executive)Shafiq AhmedS.M. AsgharA. Samad DawoodShahzada DawoodHaroon MahentiSulaiman S. MehdiMir Muhammad NasirSarfaraz Ahmed Rehman

Board Audit CommitteeS.M. Asghar (Chairman)Sulaiman S. MehdiHaroon MahentiShafiq Ahmed

CFO and Company SecretaryHafsa Shamsie

AuditorsM. Yousuf Adil Saleem & Co.(Chartered Accountants)

BankersBank Al-Habib LimitedHabib Bank LimitedNational Bank of PakistanMCB Bank Limited

Legal AdvisorZia Law Associates17, Second Floor,Shah Chiragh Chambers,The Mall, Lahore.

Share RegistrarC&K Management Associates (Pvt.) Ltd.404-Trade Tower, Abdullah Haroon Road,Near Metropole Hotel, Karachi-75530

Registered / Head Office3rd Floor, Dawood Centre,M. T. Khan Road,Karachi-75530Ph#: 021-35686001-16Fax#: 021- 35633970E-mail: [email protected]: www.dawoodlawrencepur.com

MillsLandhiLandhi Industrial Area,Karachi.Ph#: 021-35018476, 35018751Fax#: 021- 35018463, 35024520

DawoodabadDistrict Vehari.Ph#: 067- 3353347, 3353145, 3353246Fax#: 067- 3354679

DawoodpurDistrict Attock.Ph#: 0597-2641074-6Fax#: 0597-2641073

Directors’ Review

3Half Yearly Report 2012

The Board of Directors is pleased to present the un-audited financial statements of DawoodLawrencepur Limited for the half year ended June 30, 2012.

OPERATING RESULTS

Turnover of the Company for the six months ended June 30, 2012 was Rs 209.9 million as againstRs 156.4 million for the similar period last year with an improved gross margin of 16.7% on accountof a better sales mix. Resultantly, the operating loss of the Company reduced to Rs 18.5 millionas compared to a loss of Rs 30.21m for the same period last year.

The summary of Group operating results is as follows:

Half year ended Half year ended30 June 2012 30 June 2011

Rupees (million) Rupees (million)

Sales 209.89 156.38

Operating Loss (18.54) (30.21)

Share of profit from associate 274.94 406.72

Profit/(loss) from discontinued operations 14.86 (11.96)

Profit/(loss) after taxation from continuing Operations 236.33 272.28

EARNINGS PER SHARE

Earnings per share on a standalone basis for the half year were Rs. 2.03 per share as comparedto Rs. 0.52 per share in June 2011. Earnings per share on a consolidated basis for the Groupwere Rs 4.25 as compared to Rs. 4.41 per share for the similar period last year.

PROGRESS REVIEW

Whilst shifting its focus towards the renewable energy business, the Company has successfullycurtailed losses from its textile business despite a sharp increase in energy and raw material costs.Earlier in the year, it was decided to enter into a time-bound, non-exclusive licensing agreementwith an associated concern for sales of brand Lawrencepur. The Agreement came into effect fromApril 1 and the licensee has started marketing and selling products under the Lawrencepur brandname. This initiative, coupled with a profitable product mix, has contributed towards containingCompany losses.

During the period under review, Tenaga Generasi Limited, a wholly owned subsidiary of theCompany, was awarded a cost-plus tariff for its 50MW wind power plant. NEPRA did not considerthe efficiency of the project compared to others and deducted many of the legitimate costs leadingto a very low and unfeasible tariff. Subsequently the Company has decided to proceed with afeed-in tariff and is in the process of amending its Project contracts to reflect this regime.

BUSINESS OUTLOOK

The textile business manufacturing environment is expected to remain challenging given theincrease in energy and natural fiber costs. However, the Company is hopeful that the focus broughtabout by licensing the brand will result in improved market presence, brand image and futureprofitability.

The rapid increase in the power sector circular debt and the downgrading of Pakistan’s creditrating is resulting in an increase in the cost of debt, leading to reduced returns for the sponsorsof TGL. Whilst the Company is managing this by opting for a Feed-in tariff that offers a higherupside on returns, circular debt and its impact on the entire power sector remains a key concern.Any further deterioration in circular debt may necessitate a reassessment of the Company'sstrategic stance on the power sector. In the meantime, TGL continues to work towards achievementof financial close of the Project.

The Company is aggressively focusing on its strategic interest in the renewable energy business,research activity for which has already been initiated. During the half year, the Company hascommenced test marketing RE products in the local market and entered into agency agreementsfor distribution of solar energy products. The need for research and development in the alternateenergy space cannot be overemphasized given the current state of the power sector in theCountry.

We would like to acknowledge and thank our customers, shareholders and employees for theirongoing contribution and support.

On Behalf of the Board

Karachi: INAM UR RAHMANAugust 13, 2012 Chief Executive

4

Auditors' Report to the Members onReview of Condensed Interim Financial Information


Introduction

We have reviewed the accompanying condensed interim balance sheet of Dawood LawrencepurLimited (“the Company”) as at June 30, 2012 and the related condensed interim profit and lossaccount, condensed interim statement of comprehensive income, condensed interim cash flowstatement, condensed interim statement of changes in equity and notes to the interim financialinformation, for the half year then ended (here-in-after referred to as the " interim financialinformation"). The Company's management is responsible for the preparation and presentationof this interim financial information in accordance with approved accounting standards as applicablein Pakistan. Our responsibility is to express a conclusion on this interim financial information basedon our review. The figures of the condensed interim profit and loss account and condensed interimstatement of comprehensive income for the quarters ended June 30, 2012 and 2011 have notbeen reviewed, as we were required to review only the cumulative figures for the half year endedJune 30, 2012.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'.A review of interim financial information consists of making inquiries, primarily of persons responsiblefor financial and accounting matters, and applying analytical and other review procedures. A reviewis substantially less in scope than an audit conducted in accordance with International Standardson Auditing and consequently does not enable us to obtain assurance that we would becomeaware of all significant matters that might be identified in an audit. Accordingly, we do not expressan audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim financial information as of and for the half year ended June 30, 2012 is notprepared, in all material respects, in accordance with approved accounting standards as applicablein Pakistan for interim financial reporting.

Chartered Accountants

Engagement Partner:Mushtaq Ali Hirani

KarachiAugust 13, 2012

Condensed Interim Balance Sheet (Un-audited)As at June 30, 2012

6

(Un-audited)June 30,

2012

(Audited)December 31,

2011--------Rupees in thousand-------

ASSETSNon-current assetsProperty, plant and equipment 4 51,116 55,336Intangible assets 421 384Long term investments 5 341,889 341,017Long term deposits 10,544 10,544

403,970 407,281Current assetsStores and spares 43,660 45,206Stock-in-trade 345,753 319,688Trade debts 125,072 82,643Loans and advances 23,639 12,948Deposits, prepayments and other receivables 61,479 69,268Short term investments 6 582,957 574,691Cash and bank balances 28,039 29,270

1,210,599 1,133,714

Assets classified as 'held for sale' 186,892 188,675 1,801,461 1,729,670

SHARE CAPITAL AND RESERVESAuthorized 75,000,000 (2011: 75,000,000)-Ordinary shares of Rs. 10/- each 750,000 750,000

Issued, subscribed and paid up capital 590,578 590,578Reserves 605,633 604,761Unappropriated profit 405,715 344,536

1,601,926 1,539,875

LIABILITIES Non-current liability Deferred liability-staff gratuity 62,820 58,885

Current liabilitiesTrade and other payables 119,402 123,104Provision for taxation 17,313 7,806

136,715 130,910CONTINGENCIES AND COMMITMENTS 7

1,801,461 1,729,670

The annexed notes from 1 to 10 form an integral part of this condensed interim financial information.

SHAHID HAMID PRACHAChairman

INAM UR RAHMANChief Executive

Note

Condensed Interim Profit and Loss Account (Un-audited)For The Half Year Ended June 30, 2012

7

June 30,2012

--------------------Rupees in thousand------------------



Half Yearly Report 2012

June 30,2011

Quarter endedJune 30,

2012June 30,

2011

Half year ended

CONTINUING OPERATIONS

Sales - net 122,943 80,564 209,893 156,383Cost of goods sold (107,544) (71,564) (174,748) (135,079)Gross profit 15,399 9,000 35,145 21,304

Other operating income 33,119 40,948 126,965 65,407Selling and distribution expenses 1,684 2,928 4,965 5,772Administrative expenses 24,776 19,739 42,047 33,575Finance cost 119 118 214 252Impairment loss on

'available for sale' investments - 738 - 738 (26,579) (23,523) (47,226) (40,337)

Profit before taxation 21,939 26,425 114,884 46,374Taxation (8,085) (2,852) (9,507) (3,719)

Profit after taxation fromcontinuing operations 13,854 23,573 105,377 42,655

DISCONTINUED OPERATIONS

(Loss)/Profit fromdiscontinued operations (753) (5,731) 14,860 (11,955)

Profit for the period 13,101 17,842 120,237 30,700

Earnings per share - Basic and dilutedContinuing operations (Rs.) 0.23 0.40 1.78 0.72

Earnings per share - Basic and dilutedDiscontinued operations (Rs.) (0.01) (0.10) 0.25 (0.20)


Condensed Interim Statement of Comprehensive Income (Un-audited)For the Half year ended June 30, 2012

8



June 30,2012


June 30,2011


2012June 30,

2011

Half year ended

Profit for the period 13,101 17,842 120,237 30,700

Other comprehensive income

Surplus on remeasurement of 'available for sale' investments 50 410 872 161

Total comprehensive incomefor the period 13,151 18,252 121,109 30,861


Half year ended June 30, 2012

-----------------------Rupees in thousand------------------------

Condensed Interim Cash Flow Statement (Un-audited)For the Half year ended June 30, 2012

9



Half Yearly Report 2012

ContinuingOperations

DiscontinuedOperations

Total Half year ended June 30, 2011



Total

A. CASH FLOWS FROM OPERATING ACTIVITIES

Profit /(loss) before taxation 114,884 14,860 129,744 46,374 (11,955) 34,419Adjustments for: Depreciation 3,367 1,033 4,400 3,236 1,190 4,426Amortization 225 - 225 62 124 186Property plant and equipment written off 1,430 - 1,430 Provision for staff retirement gratuity 7,067 253 7,320 4,708 291 4,999Gain on disposal of property, plant and equipment (13,981) (253) (14,234) - (788) (788)Impairment loss on 'available for sale' investments - - - 738 - 738Gain on sale of short-term investments (13,901) - (13,901) (5,328) - (5,328)Unrealized gain on remeasurement of short-term investments (15,366) - (15,366) (38,445) - (38,445)Dividend income (77,932) - (77,932) (19,483) - (19,483)Finance cost 214 6 220 252 5 257

6007 15,899 21,906 (7,887) (11,133) (19,020)(Increase) / decrease in current assets Stores and spares 1,546 - 1,546 (1,192) - (1,192)Stock in trade (26,064) 1,782 (24,282) (83,910) 5,435 (78,475)Trade debts (42,429) - (42,429) 8,654 98 8,752Loans and advances 265 - 265 (770) (55) (825)Deposits, prepayments and other receivables 13,431 - 13,431 (2,878) 86,822 83,944Increase/ (decrease) in current liabilitiesTrade and other payables (5,001) - (5,001) 30,669 13,467 44,136

(58,252) 1,782 (56,470) (49,427) 105,767 56,340Cash (used in) / generated from operations (52,245) 17,681 (34,564) (57,314) 94,634 37,321Finance cost paid (214) (6) (220) (252) (5) (257)Gratuity paid (9,027) - (9,027) (3,841) - (3,841)Taxes paid (10,956) - (10,956) (5,898) - (5,898)Net cash (used in) / generated from operating activities (72,442) 17,675 (54,767) (67,304) 94,629 27,325

B. CASH FLOWS FROM INVESTING ACTIVITIES

Sale proceed from disposal ofproperty, plant and equipment 14,530 523 15,053 - 1,435 1,435Purchase of property, plant and equipment (2,594) - (2,594) (1,108) - (1,108)Purchase of intangible assets (97) - (97) - - - Investment in subsidiary - - - (170,000) - (170,000)Short term investments - net 21,001 - 21,001 118,000 - 118,000Dividend received 77,932 - 77,932 19,483 - 19,483Net cash generated from/(used in) investing activities 110,772 523 111,295 (33,626) 1,435 (32,191)

C. CASH FLOWS FROM FINANCING ACTIVITIES

Fund transferred from operations - - - 94,930 (94,930) -Payment of dividend (57,759) - (57,759) - - -Net cash (used in) / generated from financing activities (57,759) - (57,759) 94,390 (94,930) -

Net (decrease) / increase in cash and cash equivalents (A+B+C) (19,429) 18,198 (1,231) (6,000) 1,134 (4,866)

Cash and cash equivalents at beginning of the period 110,439 (81,169) 29,270 23,061 1,413 24,474Cash and cash equivalents at end of the period 91,010 (62,971) 28,039 17,061 2,547 19,608


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Notes to the Condensed Interim Financial Information (Un-audited)For the Half Year ended June 30, 2012


1. GENERAL INFORMATION

1.1 Dawood Lawrencepur Limited, "the Company" was incorporated in Pakistan in the year2004 as a public limited company.The shares of the Company are listed on the Karachiand Lahore Stock Exchanges. The Company is principally engaged in the business ofmanufacture and sale of yarn and fabrics made from natural and man-made fibers andblends thereof. The registered office of the Company is situated at 3rd Floor, DawoodCentre, M.T. Khan Road, Karachi.

1.2 The Company in the year 2008 suspended its manufacturing operations located atBurewala, District Vehari and closed down the mill in 2009. The assets (plant, machineryand current assets) relating to the closed down unit have been classified as discontinuedoperations, and are accounted for as per the requirement of IFRS - 5 'Non-currentAssets Held for Sale and Discontinued Operations '.

2. BASIS OF PREPARATION

This condensed interim financial information has been prepared on the historical costconvention except that obligations under certain staff retirement benefits have been measuredat present value and certain investments which have been measured at fair market value.All amounts are in Pakistani Rupees which is the functional and presentation currency of theCompany unless stated otherwise.

2.1 Statement of compliance

This condensed interim financial information of the Company for the half year endedJune 30, 2012 has been prepared in accordance with the requirements of InternationalAccounting Standard 34 - Interim Financial Reporting.and provisions of and directivesissued under the Companies Ordinance, 1984.In case where requirements differ, theprovisions of or directives issued under the Companies Ordinance, 1984 have beenfollowed.

2.2 The disclosures made in this condensed interim financial information have been limitedbased on the International Accounting Standard 34 - Interim Financial Reporting. Thisdoes not include all of the information and disclosures required in the annual financialstatements and should be read in conjunction with the annual financial statements ofthe Company for the year ended December 31, 2011.

2.3 This condensed interim financial information is unaudited, however it is subjected to alimited scope review by the auditors and is being submitted to the shareholders inaccordance with Section 245 of the Companies Ordinance, 1984.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND RISKMANAGEMENT POLICIES

3.1 The accounting policies, underlying estimates and methods of computation adoptedin the preparation of this condensed interim financial information are the same as thoseapplied in the preparation of annual audited financial statements of the Company forthe year ended December 31, 2011.

3.2 The financial risk management objectives and policies adopted by the Company areconsistent with those disclosed in the financial statements of the Company for the yearended December 31, 2011.

12


Acquisition at cost


Disposal at written

down value

(Unaudited)June 30, 2012

Acquisition at cost

Disposal at written

down value


4. ACQUISITION AND DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

Plant and Machinery - 25 - -Equipment 595 - 1,108 -Computer equipment 190 - - -Vehicles 1,809 794 - 646

2,594 819 1,108 646

4.1 Property, plant and equipment include temporary idle property relating to closed downunit with a carrying value of Rs. 20.6 million (December 31, 2011: Rs. 21.46 million).

5. LONG TERM INVESTMENTS

Investment in related parties at cost 5.1 335,822 335,822Other investments 5.2 6,067 5,195

341,889 341,017

5.1 Investment in related parties at cost

Wholly owned subsidiary - unquotedTenaga Generasi Limited

Percentage holding 100%(December 31, 2011: 100%)24,600,000 (December 31, 2011: 24,600,00) 270,528 270,528fully paid ordinary shares of Rs. 10/- eachChief Executive Officer: Mr. Inam ur Rahman

Associated company - quotedDawood Hercules Corporation Limited

Percentage holding 16.19%(December 31, 2011: 16.19%)77,931,896 (December 31, 2011: 77,931,896)fully paid ordinary shares of Rs. 10/- each 65,294 65,294Market value Rs. 2,572 million(December 31, 2011: 3,273 million)Chief Executive Officer: Mr. Shahid Hamid Pracha

335,822 335,822

(Unaudited)June 30,

2012



Note



5.2 Other investments- Available for sale investments

Listed Securities 200,000 200,000 National Investment Trust 6,052 5,180

6,052 5,180Un-listed Securities

795,000 795,000 Karnaphuli Paper Mills Limited - - 100 100 Mianwali Central Co-operative

Bank Limited - - 1,500 1,500 Asian Co-operative Society Limited 15 15

15 15 6,067 5,195

5.2.1 Cost of investment in securities classified as 'available for sale' is Rs. 2.455 million (December 31,2011 : Rs. 2.455 million).

6. SHORT TERM INVESTMENTS

Financial assets at fair value through profit or loss 6.1 582,957 574,691

6.1 Financial assets at fair value through profit or loss

3,235,900 3,560,143 Meezan Cash Fund 161,989 178,506 1,638,439 1,680,961 UBL Liquidity Plus Fund 164,466 168,911 1,603,889 1,746,133 MCB Cash Management Optimizer Fund 160,572 179,652 9,543,060 4,675,740 NAFA Government Securities Liquid Fund 95,930 47,622

582,957 574,691

6.1.1 Cost of investment in securities classified as 'financial assets at fair value through profit or loss' isRs. 492.7 million (December 31, 2011: Rs.499.8 million).

7. CONTINGENCIES AND COMMITMENTS

7.1 Contingencies

7.1.1 The Taxation Officer while framing assessment for the tax year 2003 made errors in allowing expensesrelating to gratuity, lease rentals, employee perquisites and utilities amounting to Rs. 29.34 million,and for tax years 2004 to 2005 had made additions on account of allocation of expenses betweenthe normal and presumptive income of the Company amounting to Rs. 136.10 million and haddisallowed Rs. 20.62 million as adjustment of brought forward losses of the Company.

(Unaudited)June 30,

2012



June 30,2012

December 31,2011

Names of Investee

No. of Shares / Units

(Unaudited)June 30,

2012

(Audited)December31, 2011

--------Rupees in thousand-------

June 30,2012

December 31,2011

Names of Investee

No. of Units

14


During the year ended December 31, 2011, Appellate Tribunal Inland Revenue (ATIR) decided theissue of brought forward losses against the Company, however, the Company has filed an appealbefore the High Court and a decision is awaited. The remaining issues have been set aside by thesaid Tribunal and remanded to the taxation officer for reconsideration. The tax impact of all casesamounts to Rs. 65.12 million.

7.1.2 The Company is contingently liable against bank guarantees and counter guarantees amountingto Rs 16.29 million (December 31, 2011: Rs. 11.91 million).

7.2 Commitments

7.2.1 The Company has commitments against letters of credit for purchase of raw material amountingto Rs.5.7 million (December 31, 2011: Rs. 28.6 million)

7.2.2 The Company has a commitment to supply fabric to a customer amounting to Rs.1.6 million(December 31 , 2011: Rs. 9.8 million).

8. TRANSACTIONS WITH RELATED PARTIES

Related parties comprise of a subsidiary and associated undertakings, other related group companies,directors of the Company and key management personnel. The Company in the normal course of businesscarries out transactions with various related parties. Other significant transactions with related parties areas follows:




Relationship Nature of Transaction

a. Subsidiary Company

Tenaga Generasi Limited Reimbursement of expenses 5,201 4,159Short term loan disbursed - 25,000Repayment of short term loan - 25,000Markup paid on short term loan - 303Advance against issuance of share capital - 170,000Subscription of ordinary shares - 170,000

b. Associated Companies

Dawood Hercules Dividend income 77,932 19,483Corporation Limited Purchase of asset 855 -

Reimbursement of expenses 170 459

Sach International Sale of fabrics 119,912 8,733(Pvt) Limited Reimbursement of expenses 3,769 649

Retirement and other benefits transferred to the Company 5,748 -Retirement and other benefits transferred from the Company 6,572

- Cyan Limited Insurance claim received 430 43

Insurance premium refund / paid - 371

D H Fertilizer Limited Reimbursement of expenses 652 -







c. Other related parties

Sui Northern Gas PipelinesLimited Utility charges paid 11,232 10,356

Sale of fabric 2,590 -

Dawood Foundation Rental charges paid 3,908 3,398Reimbursement of expenses 824 653

Inbox Business Technologies Hardware maintenance(Pvt) Limited charges paid 751 -

Dawood Corporation(Pvt) Limited Reimbursement of expenses - 155

d. Key management personnel Salaries and employee benefits 9,914 8,873

9. APPROVAL OF CONDENSED INTERIM FINANCIAL INFORMATION

This condensed interim financial information was authorized for issue on August 13, 2012 by theBoard of Directors of the Company.

10. GENERAL

Figures have been rounded off to the nearest thousand of rupees.



Condensed Interim ConsolidatedFinancial Information (Un-audited)

Condensed Interim Consolidated Balance Sheet (Un-audited)As at June 30, 2012


(Unaudited)June 30,

2012



ASSETSNon-current assetsProperty, plant and equipment 4 209,382 188,524Intangible assets 23,429 23,218

232,811 211,742Long term investments 5 4,281,483 4,083,174Long term deposits 10,544 10,544

4,524,838 4,305,460

Current assetsStores and spares 43,660 45,206Stock-in-trade 345,753 319,688Trade debtors 125,072 82,643Loans and advances 23,905 13,080Deposits, prepayments and other receivables 62,373 69,901Short term investments 6 630,197 654,837Cash and bank balances 51,977 52,314

1,282,937 1,237,669

Assets classified as held for sale 186,892 188,6755,994,667 5,731,804

SHARE CAPITAL AND RESERVESShare capitalAuthorised:75,000,000 (December 31, 2011: 75,000,000) Ordinary shares of Rs. 10/- each 750,000 750,000

Issued, subscribed & paid up capital 590,578 590,578Reserves 645,051 580,393Unappropriated profit 4,549,328 4,357,199

5,784,958 5,528,170

Non-current liabilitiesDeferred liability 63,926 59,674

Current liabilities Trade and other payables 127,374 135,419 Provision for taxation 18,409 8,541

145,783 143,960 5,994,667 5,731,804

CONTINGENCIES AND COMMITMENTS 7

The annexed notes from 1 to 10 form an integral part of this condensed interim consolidated financial information.



June 30,2012




June 30,2011


2012June 30,

2011

Half year ended

CONTINUING OPERATIONS

Sales - net 122,943 80,564 209,893 156,383Cost of goods sold (107,544) (71,564) (174,748) (135,079)Gross profit 15,399 9,000 35,145 21,304

Selling and distribution (1,684) (2,928) (4,965) (5,772)Administrative expenses (27,054) (28,526) (48,362) (45,370)Other operating income 34,681 25,178 53,252 49,539

5,943 (6,276) (75) (1,603)

Finance cost (220) (233) (357) (367)Impairment loss on 'available for sale' investments of

Holding company - (738) - (738)Associated company - (56,543) (37,988) (56,930)Share of profit from associates excluding impairment loss on 'available for sale' investments 164,059 161,327 274,935 406,722

163,839 103,813 236,590 348,687Profit before taxation 185,181 106,537 271,660 368,388Provision for taxation- Current (8,292) (2,856) (9,868) (3,742)- Share of taxation from associate (23,020) (20,754) (25,465) (92,364)

(31,312) (23,610) (35,333) (96,106)Profit after taxation from

continuing operations 153,869 82,927 236,327 272,282

DISCONTINUED OPERATIONS

Profit / (loss) from discontinued operations (753) (5,731) 14,860 (11,955)Profit for the period 153,116 77,196 251,187 260,327

Earnings per share - Basic & diluted

Continuing operations (Rs.) 2.61 1.40 4.00 4.61Earnings per share - Basic & diluted

Discontinued operations (Rs.) (0.01) (0.10) 0.25 (0.20)


18

Condensed Interim Consolidated Profit and Loss Account (Un-audited)For The Half Year Ended June 30, 2012



June 30,2012


June 30,2011


2012June 30,

2011

Half year ended

Profit after taxation 153,116 77,196 251,187 260,327

Other comprehensive income

(Deficit) / surplus on remeasurement of 'available for sale investments' - Holding company 50 410 872 161 - Associate company 68,678 (14,799) 63,786 (66,062)Total comprehensive income 221,845 62,807 315,846 194,426

The annexed notes from 1 to 10 form an integral part of this condensed interim consolidated financialinformation.


Condensed Interim Consolidated Statement of Comprehensive Income (Un-audited)For the Half year ended June 30, 2012

Half year ended June 30, 2012

-----------------------Rupees in thousand------------------------





Total Half year ended June 30, 2011



Total

A. Cash Flow from Operating Activities:

Profit/(loss) before taxation 271,660 14,860 286,520 368,388 (11,955) 356,433Adjustment for:Depreciation 3,731 1,033 4,764 3,519 1,190 4,709Amortization 253 - 253 62 124 186Provision for gratuity 7,384 253 7,637 5,229 291 5,520Interest income (1,025) - (1,025) (776) - (776)Unrealized gain on short term investments (17,652) - (17,652) (41,160) - (41,160)Property and plant written off 1,430 - 1,430 - - -Gain on sale of short term investment (14,709) - (14,709) (5,753) - (5,753)Share of profit from associates (274,935) - (274,935) (406,722) - (406,722)Gain/(loss) on sale of property and equipment (13,978) (253) (14,231) - (788) (788)Impairment loss on available for sale investment - - - 738 - 738Impairment loss on available for sale investment- Associate 37,988 - 37,988 56,930 - 56,930Finance cost 357 6 363 367 5 372Operating profit/(loss) before working capital changes 504 18,899 16,403 (19,178) (11,133) (30,311)

(Increase)/Decrease in Current AssetsStores and spares 1,546 - 1,546 (1,192) - (1,192)Stock-in-trade (26,064) 1,782 (24,282) (83,910) 5,435 (78,475)Trade debts (42,429) - (42,429) 8,654 98 8,752Loans and advances 265 - 265 (770) (55) (825)Deposits, prepayments and other receivables 13,673 - 13,673 (2,836) 86,822 83,986Increase/(Decrease) in Current LiabilitiesTrade debts and other payable (10,106) - (10,106) 37,411 13,467 50,878

(63,115) 1,782 (61,333) (42,643) 105,767 63,124Cash generated (used)/from in operations (62,611) 17,681 (44,930) (61,821) 94,634 32,813

Payments for:Gratuity paid (9,027) - (9,027) (3,841) - (3,841)Tax paid (11,190) - (11,190) (5,927) - (5,927)Finance cost paid (357) (6) (363) (367) (5) (372)Net cash (outflow)/inflow from Operating Activities (83,185) 17,675 (65,510) (71,956) 94,629 22,673

B. Cash Flow from Investing ActivitiesAdditions to capital work in progress (25,306) - (25,306) (32,057) - (32,057)Sale proceeds from disposal of property, plant and equipment 14,574 523 15,097 - 1,435 1,435Short term investments - net 57,001 - 57,001 8,000 - 8,000Dividend received 77,932 - 77,932 19,483 - 19,483Interest received 1,284 - 1,284 - - - Purchase of intangible assets (298) - (298) - - -Purchase of property, plant and equipment (2,778) - (2,778) (1,268) - (1,268)

Net cash inflow/(outflow) from Investing Activities 122,409 523 122,932 (5,842) 1,435 (4,407)

C. Cash Flow from Financing ActivitiesDividend paid (57,759) - (57,759) - - -Net cash (outflow) from Financing Activities (57,759) - (57,759) - - -

Net (decrease)/increase in cash and cash equivalents (A+B+C) (18,535) 18,198 (337) (77,798) 96,064 18,266

Cash and cash equivalents at the beginning of the period 133,483 (81,169) 52,314 25,220 1,413 26,633

Cash and cash equivalents at the end of the period 114,948 (62,971) 51,977 (52,578) 97,477 44,899




20

Condensed Interim Consolidated Cash Flow Statement (Un-audited)For the Half year ended June 30, 2012


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22

Notes to the Condensed Interim Consolidated Financial Information (Un-audited)For the Half Year ended June 30, 2012

1. GENERAL INFORMATION

1.1 Dawood Lawrencepur Limited, "the Holding Company" was incorporated in Pakistanin the year 2004 as a public limited company formed as a result of Scheme of Arrangementfor Amalgamation in terms of the provisions of the Companies Ordinance, 1984 betweenDawood Cotton Mills Limited, Dilon Limited, Burewala Textile Mills Limited and LawrencepurWoolen and Textile Mills Limited. The shares of the Holding Company are listed on theKarachi and Lahore Stock Exchanges. The Holding Company is principally engaged inthe business of manufacture and sale of yarn and fabrics made from natural and man-made fibers and blends thereof. The registered office of the Company is situated at 3rdFloor, Dawood Centre, M.T. Khan Road, Karachi.

1.2 The Holding Company in the year 2008 suspended its manufacturing unit operationslocated at Dawoodabad, Burewala, District Vehari, and closed down the mill in 2009.The assets (plant, machinery and current assets) relating to the closed down unit havebeen classified as discontinued operations and are accounted for as per the requirementsof IFRS-5 'non-current assets held for sale and discontinued operations'.

1.3 The Holding Company has a wholly owned subsidiary namely Tenaga Generasi Limited"the Subsidiary Company". The Subsidiary Company was incorporated in 2005 as anunlisted public company under the Companies Ordinance, 1984 to primarily carry outbusiness of power generation as independent power producer of wind power. TheSubsidiary Company is in the process of setting up a wind energy project in MirpurSakro, District Thatta, Sindh. The registered office of the Subsidiary Company is situatedat Dawood Centre, M.T. Khan Road, Karachi.

2. BASIS OF PREPARATION

This condensed interim consolidated financial information includes the financial informationof Dawood Lawrencepur Limited (the Holding Company). The condensed interim financialinformation of the Subsidiary Company has been consolidated on a line by line basis. Thiscondensed interim consolidated financial information has been prepared under the historicalcost convention, except certain investments have been measured at fair value and investmentin associate is accounted for using the equity method. All amounts are in Pakistani Rupeeswhich is the functional and presentation currency of the Company unless stated otherwise.

2.1 Statement of compliance

This condensed interim consolidated financial information for the half year ended June30, 2012 has been prepared in accordance with the requirements of InternationalAccounting Standard 34 - Interim Financial Reporting and provisions of and directivesissued under the Companies Ordinance, 1984. In case where requirements differ, theprovisions of or directives issued under the Companies Ordinance, 1984 have beenfollowed.

The disclosures made in this condensed interim consolidated financial information havebeen limited based on the International Accounting Standard 34 - Interim FinancialReporting. They do not include all of the information and disclosures required in theannual financial statements and should be read in conjunction with the annual financialstatements for the year ended December 31, 2011.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND RISKMANAGEMENT POLICIES

3.1 The accounting policies, underlying estimates and methods of computation adoptedin the preparation of this condensed interim consolidated financial information are thesame as those applied in the preparation of annual audited financial statements for theyear ended December 31, 2011.

3.2 The financial risk management objectives and policies adopted are consistent with thosedisclosed in the financial statements for the year ended December 31, 2011.



Acquisition at cost


Disposal at written

down value


Acquisition at cost

Disposal at written

down value


4. ACQUISITION AND DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

Plant & Machinery - 25 - -Furniture, Fixture and Office Equipment 628 - 1,108 -Computer equipment 341 (46) 158 -Vehicles 1,808 794 - 646

2,777 773 1,266 646

5. LONG TERM INVESTMENTS

Investment in associated company 5.1 4,275,416 4,077,979Other investments 5.2 6,067 5,195

4,281,483 4,083,174

5.1 Investment in associated company

Associated company - quotedDawood Hercules Corporation LimitedPercentage holding 16.19% (December 31, 2011: 16.19%)77,931,896 (December 31, 2011: 77,931,896) fully paidordinary shares of Rs. 10/- eachMarket value Rs. 2,572 million(December 31, 2011: 3,273 million)Chief Executive Officer: Mr. Shahid Hamid Pracha

Opening balance :Cost 65,294 65,294Share of post acquisition profits 4,037,053 3,484,219Share of other comprehensive income of associated company (24,368) 38,284

4,077,979 3,587,797

Movement during the period / year ;Share of profit 274,935 818,449Share of other comprehensive income of associated company 63,786 (62,652)Share of taxation (25,465) (188,744)Impairment loss on 'available for sale investments' (37,988) (57,388)Dividend received (77,832) (19,483)

197,437 490,1824,275,416 4,077,979

Financial results as at March 31, 2012 have been used for the purpose of application of equitymethod.

(Unaudited)June 30,

2012



Note

24


5.2 Other investments Available for sale investments

Listed Securities 200,000 200,000 National Investment Trust Limited 6,052 5,180

Un-listed Securities 1,500 1,500 Asian Co-operative Society Limited 15 15

795,000 795,000 Karnaphuli Paper Mills Limited - -100 100 Mianwali Central Co-operative

Bank Limited - - 15 15

6,067 5,195

Cost of Investment in securities classified as 'available for sale' is Rs. 2.45 million (December 31,2011:Rs. 2.45 million).

6. SHORT TERM INVESTMENTS

Held for trading at fair value through Profit and Loss 6.1 630,197 654,837

6.1 Held for trading at fair value through Profit and Loss

3,235,900 3,560,143 Meezan Cash Fund 161,989 178,506 1,638,439 1,680,961 UBL Liquidity Plus Fund 164,466 168,911 2,075,752 2,525,114 MCB Cash Management Optimizer Fund 207,812 259,798 9,543,060 4,675,740 NAFA Government Securities Liquid Fund 95,930 47,622

630,197 654,837

Cost of investment in securities classified as 'financial assets at fair value through profit or loss' is Rs.537.6 million (December 31, 2011: Rs.573.6 million).

7. CONTINGENCIES AND COMMITMENTS

7.1 Contingencies

7.1.1 The Taxation Officer while framing assessment for the tax year 2003 made errors in allowingexpenses relating to gratuity, lease rentals, employee perquisites and utilities amounting to Rs.29.34 million, and for tax years 2004 to 2005 had made additions on account of allocation ofexpenses between the normal and presumptive income of the Company amounting to Rs. 136.10million and had disallowed Rs. 20.62 million as adjustment of brought forward losses of the HoldingCompany.

(Unaudited)June 30,

2012



June 30,2012

December 31,2011

Names of Investee

No. of Shares / Units

(Unaudited)June 30,

2012



June 30,2012

December 31,2011

Names of Investee

No. of Units



During the year ended December 31, 2011, Appellate Tribunal Inland Revenue (ATIR) has decidedthe issue of brought forward losses against the Holding Company, however, the Holding Companyhas filed an appeal before the High Court and a decision is awaited. The remaining issues havebeen set aside by the said Tribunal and remanded to the taxation officer for reconsideration. Thetax impact of all cases amounts to Rs. 65.12 million.

7.1.2 The Holding Company is contingently liable against guarantees and counter guarantees amountingto Rs 16.29 million (December 31, 2011: Rs. 11.91 million). These are secured against margins.

7.1.3 The Subsidiary Company has arranged a bank guarantee of USD 250,000 (2011: USD 250,000)to Alternative Energy Development Board (AEDB) for Letter of Interest. The guarantee is valid uptoJune 30, 2012.

7.2 Commitments

7.2.1 The Holding Company has commitments against letters of credit for purchase of raw materialamounting to Rs.5.7 million (December 31, 2011: Rs. 28.6 million)

7.2.2 The Holding Company has a commitment to supply fabric to a customer amounting to Rs.1.6million (December 31 , 2011: Rs. 9.8 million).

June 30, 2012 June 30, 2011--------Rupees in thousand-------


a. Associated companies

Dawood HerculesCorporation Limited Dividend income 77,932 19,483

Purchase of asset 855 -Reimbursement of expenses 170 -

Sach International(Private) Limited Sale of fabric 119,912 8,733

Reimbursement of expenses 3,769 649Retirement and other benefits transferred to the Company 5,748 -Retirement and other benefits transferred from the Company 6,572 -

Cyan Limited Insurance claim received 430 -Insurance premium refund / paid - 371

D H Fertilizer Limited Reimbursement of expenses 652 -

b. Other related parties

Sui Northern GasPipelines Limited Utility charges paid 11,232 10,356

Sale of fabric 2,590 -

The Dawood Foundation Rental charges paid 3,908 3,398Reimbursement of expenses 824 653

Inbox Business Hardware maintenanceTechnologies (Pvt) Limited charges paid 751 -

Dawood Corporation(Pvt) Limited Reimbursement of expenses - 155

c. Key ManagementPersonnel Salaries and employee benefits 18,152 15,308

(Unaudited)

26


9. DATE OF AUTHORIZATION FOR ISSUE

This condensed interim consolidated financial information was authorized for issue on August13, 2012 by the Board of Directors of the Holding Company.

10. GENERAL

Figures have been rounded off to the nearest thousand rupees.



for the half year ended june 30, 2012 (un-audited) hy... · mushtaq ali hirani karachi august 13,...

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